Retail survey predicts a bit of holiday cheer

It will be a holly jolly Christmas for Twin Cities retailers if a consumer forecast survey released Wednesday hits the mark.

After three consecutive years of trimming their holiday budgets, Twin Cities shoppers say they plan to spend more this holiday season than a year ago, according to the University of St. Thomas’ ninth annual holiday spending sentiment survey.

The good news: Spending for holiday gifts is expected to average $680 per household, up 6.8 percent from a year ago when the figure was $637 per household. If shoppers follow through, it would mark the first year-over-year increase in holiday spending since 2006.

“The tone among today’s Twin Cities shoppers is clearly more upbeat than last year, and it’s more upbeat here than in the nation as a whole,” Dave Brennan, co-director of St. Thomas’ Institute for Retailing Excellence, said in a statement. “Does this mean happy days are here again? Well, yes and no. It is better than last year but not back to what it was before the recession.”

Lorman Lundsten, a St. Thomas marketing professor, added, “Our survey is designed to track the intentions of shoppers. The responses are pointing to a rebound … but we haven’t seen that rebound just yet. If we are going to spend our way out of a recession, then consider this good news.”

So, forgive me for being a skeptic, but what’s gotten into Twin Cities shoppers?

Even St. Thomas’ survey meisters – Brennan and Opus College of Business colleagues Lundsten and John Sailors – seemed a bit surprised.

“Over the years, the St. Thomas study has mirrored or painted a slightly more pessimistic shopping picture than national surveys,” their news release said.

But not this year.

This time, most national surveys are predicting less than half of the sales gains suggested in the St. Thomas survey of 306 households conducted in the last week of October. For example, the usually ebullient National Retail Federation predicts a 2.3 percent increase in holiday season sales and the International Council of Shopping Centers is forecasting a 3 percent to 3.5 percent increase.

So, how is it that the Twin Cities’ holiday shopping forecast is rosy compared to the nation’s?

Consumers who are employed “are not running scared like they were last year,” Brennan said.

Well, that’s a good point since Minnesota’s unemployment rate is close to 1 percentage point lower than a year ago.

Still, the state’s jobless rate is up from about two years ago when it hovered between 4 and 5 percent.

While more people, particularly higher-income earners, may be starting to feel a bit more confident about the economy and their jobs, others are still unemployed and underemployed.

I only have to look to my wife, who had her contract writing job cut in half this fall. As a result, I think we’re going to be pretty conservative with our Christmas spending. And I think a lot of other people are in the same boat.

Beyond the nation’s continuing economic woes, I haven’t sensed any real excitement for what the retail market has to offer this holiday season. Yes, big-screen TVs are coming down in price.

But where are the hot new toys? The blockbuster music or movie releases?

Another consideration: Holiday spending predictions are usually overly optimistic, even when they are more restrained.

So, I tend to side with Britt Beemer, chairman of America’s Research Group, who thinks holiday sales across the nation are more likely to rise 1 percent at best.

In a recent survey, America’s Research Group found that 55 percent of respondents said they plan to spend less on Christmas this year – the highest percentage ever in the 20-plus years of his company’s surveys, Beemer said.

In contrast, the latest St. Thomas survey of 306 households found that 30.1 percent of respondents said they plan to spend less this year than in 2009 – the lowest percentage since the survey began in 2002.

That’s down from 54 percent in 2009 who said they planned to spend less on holiday gifts, Brennan said.

Nevertheless, the St. Thomas survey is meant to measure only how much Twin Cities shoppers think they will spend for holiday gifts, not whether they actually will spend that amount.